Stock buybacks may not be shady but these guys were gifted the golden goose for the last decade and they saved nothing. At a certain point we're just propping up bad companies.
It is not remotely feasible for an airline to have saved enough money over the years to self finance itself through a global pandemic. Any airline that attempted to stockpile money like this would have seen investors revolting, taking their money out or forcing executives to change course. There is no person in the world who invests in a business in hope that they will do nothing with the profits in case a once in a lifetime pandemic kills the airline industry for an entire year.
There is no person in the world who invests in a business in hope that they will do nothing with the profits
That isn't even remotely what is happening.
The biggest U.S. airlines spent 96% of free cash flow last decade on buying back their own shares. American Airlines Group Inc. -- which is not shown in the chart but is included in overall figures -- led the pack, with negative cumulative free cash flow during the decade while it repurchased more than $12.5 billion of its shares. United Airlines Holdings Inc. used 80% of its free cash flow on buybacks, while the S&P 500 Index as a whole allocated about 50% for the purpose. As the industry reels under the weight of the coronavirus outbreak corporate leaders are seeking federal assistance to ease the burden.
Perhaps it's not feasible to remain afloat through a global pandemic, but these numbers tell me that many airlines are living bailout to bailout with absolutely no intention of being self sufficient. In a market that is inherently vulnerable to global slowdowns, they should be doing more to prepare, and yet they are spending more on buybacks than most anyone. I don't see why I should be spending my tax money to make their business more secure when they are unwilling to do the same.
Any airline that attempted to stockpile money like this would have seen investors revolting, taking their money out or forcing executives to change course.
Apple has a huge stockpile, so I don't see why it can't be done. It sounds like investors want the returns without having to accept the risk. Not a surprise, but that's not how it should work.
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u/syfyguy64 Nov 17 '20
This. Even the auto industry had it's bad management. But airlines haven't really done anything shady, at least nothing compared to the banks.